IMF predicts dire consequences if deficit reduction fails
03 Apr 2012, 6:41 PM
Daniel Bosley
The IMF yesterday warned the People’s Majlis that if the country does not reduce its expenditure, it risks running out of reserves and miring the country in poverty.
“The expenditure has not been under control since 2009. It has been rising, and we have been [issuing] warnings since then,” Haveeru reported the Chief of the IMF mission in the Maldives, Jonathan Dunn, as telling parliament.
Previously highlighting “significant policy slippages”, in particular the government’s failure to curtail spending, the IMF felt it necessary to delay the third tranche of funding in 2010. Nasheed’s government contended that it had tried to impose austerity measures, in particular pay cuts for civil servants, but had been blocked by the Civil Service Commission (CSC) and then-opposition majority parliament for political reasons.
Dunn recommended against printing money or obtaining loans from other countries, given the current economic frailty of the Maldives.
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